Special Educational Needs and Disabilities Funding

Vince Cable Excerpts

Tuesday 12th February 2019 Westminster Hall

[Sir Gary Streeter (in the Chair)]

Before I call Sir Vince Cable to move the motion for this important debate on special educational needs and disabilities funding, I can report that 12 colleagues have put in to speak from the Back Benches. Therefore, after Sir Vince’s speech, there will be a voluntary time limit of three and a half minutes. Please try to contain yourselves a little in interventions; otherwise, we will go well over time.

[Sir Vince Cable (Twickenham) (LD)]

I beg to move,

That this House has considered special educational needs and disabilities funding.

It is a privilege to speak on this subject, which is of immense concern to a large number of us and to our constituents, and that is reflected in the demand to speak. It is rare that we get a Brexit-free zone in Parliament at the moment, but this is one, and it is right that we pay attention to it. Far too many Government problems have been squeezed out by the attention given to a single issue, but how we treat children with special educational needs will have enormous implications for decades to come.

Essentially, I will speak about the conflict between two sets of pressures: an irresistible force and an immovable object. The irresistible force is, of course, the demand of parents of children with special needs, who have been led to believe, by the very progressive Children and Families Act 2014, that their children’s needs will be met and their full potential realised through education, health and care plans. The immovable object is money, manifesting itself now in a serious financial crisis for local authorities, which are expected to meet statutory obligations, but find that demand is rising and becoming much larger than the funding available through the special needs block. In some cases, those local authorities are in extreme difficulty.

I will introduce the debate by quoting a parents’ group called Richmond SEND Crisis, which wrote to me yesterday, describing the problem from the parents’ point of view. The group said:

“The crisis in funding has consequences. It means more stress and mental health issues for both parents and children, parents being forced to give up work, increased levels of family break up, increased levels of children being disruptive in school, failing in school or not being in school at all. It means that schools and the wider school community suffer, as children without proper support tend to absorb a disproportionate amount of time from school staff and may be disruptive in class.

All of these consequences inevitably hit the most vulnerable… families the hardest.”

[Dr David Drew (Stroud) (Lab/Co-op)]

Does the right hon. Gentleman agree that one significant change is the growth in home-school education? Given the amount of time it takes to get an assessment, parents are now just taking their children out of school. That cannot be a good thing.

[Sir Vince Cable]

Indeed. That is happening on a growing scale, and is augmented by the fact that many children are being excluded because of the lack of support. That, in turn, contributes to home education, which may be inferior.

[Tim Farron (Westmorland and Lonsdale) (LD)]

Does my right hon. Friend agree that the crisis in funding is about not only the overall sum of money but the distribution? Government policy means that schools have to absorb up to £11,000 of the cost of meeting an EHCP. Schools that do the right thing and accept children with special educational needs are therefore punished, and those that do not are rewarded. Does he agree that that is an unfair and wrong distribution?

[Sir Vince Cable]

Indeed. In addition to the problem facing local authorities, schools in effect pay a £6,000 penalty. Many schools that were committed to inclusion now find that increasingly difficult and are shying away from their obligations.

[Mr Jim Cunningham (Coventry South) (Lab)]

I congratulate the right hon. Gentleman on securing the debate. I fully agree with him about funding for special needs schools. Hereward College in Coventry has struggled with funding for a number of years, and does an excellent job. Another dimension is that children who have mental health problems often go home to a disruptive family life. That is not conducive to their education or mental health. Does the right hon. Gentleman agree that something should be done about that?

[Sir Vince Cable]

Yes, I do. By mentioning mental health, the hon. Gentleman reinforces the point that I will go on to make. When we talk about special needs pupils, we are talking about significantly different classes of people with fundamentally different problems. Of course, they are all individuals, but we are talking about 1.2 million people altogether in the SEN system—up by about 0.5 million since 2014. About a quarter of them, according to Mencap, have learning difficulties. That actually understates the problem, because Mencap estimates that about 40% of children with learning difficulties are never identified at school.

About 120,000 children are on the autistic spectrum, which is the most rapidly growing and difficult group to accommodate. About 300,000 have attention deficit hyperactivity disorder. Others have a physical disability. I have had correspondence with those with visual impairment problems, who lack equipment, and other groups such as deaf children, who are not included in the SEN categories at all.

We are dealing with large numbers of very different categories of people, but what they have in common is that demand for EHCPs is growing rapidly: it has grown by about 35% over the four years since the legislation was enacted, which is about three times the growth of the school population. It is also three times the amount of funding available through the Government grant allocation.

--- Later in debate ---

[Sir Gary Streeter (in the Chair)]

Order. I remind Members that interventions should be brief.

[Sir Vince Cable]

My hon. Friend is right; that is one of many anomalies. Many such issues were not properly accounted for and are not being fully funded. I will come to others in a moment.

The consequence of the growing demand is that many local authorities, which are genuinely trying to do their best in most cases, are accumulating large financial deficits. The Local Government Association, which has done lots of research on it, believes that there will be a gap of about £1.6 billion at the end of the next financial year. That is unaccounted for at present.

Some London authorities—I speak as a London MP, but I know that other parts of the country have similar problems—have a shortfall from the high needs block of about 7%. For about six boroughs in London, it is more than 10%. For my borough, Richmond, it is 20%, and I think three others are in an even worse position, including the borough of my right hon. Friend the Member for Kingston and Surbiton (Sir Edward Davey). For his borough, I think it is 40%.

[Sir Edward Davey (Kingston and Surbiton) (LD)]

My right hon. Friend is right that the situation for Kingston is the worst of any London borough. We are spending more than 40% above our allocation, with a potential knock-on to the budgets of schools across the board, and potentially even the solvency of the local authority. Given how serious that is, does he agree that Ministers need to take action now and that we need to talk to the Department of Health and Social Care? The health service is often not paying for the health part of EHCPs.

[Sir Vince Cable]

My right hon. Friend is absolutely right: those are both key parts of the solution. For example, I have discovered that there are children whose need for wheelchairs—clearly a health requirement—is treated as an educational need. There are many such cases in which the finance sits in silos and is not sensibly dealt with.

[Layla Moran (Oxford West and Abingdon) (LD)]

My right hon. Friend is being very generous with his time, and I congratulate him on securing this debate. My constituent Sally Foulsham, who runs a parent group called SHIFT, is in contact with more than 100 parents. She reports that what most frustrates them is the lack of funding for child and adolescent mental health services, which is a major block to unlocking the funding that should be available for EHCPs in the first place. Does my right hon. Friend agree?

[Sir Vince Cable]

Yes. The decline in CAMHS has led to a lot of children not being properly helped at an early stage and requiring greater special needs provision as a result.

To conclude my point about finance, a large number of local authorities are in serious financial trouble, and not just in London—even those that are doing their best and are perfectly competent. Consequently, they have a large financial deficit sitting on their balance sheet. One of their main sources of anxiety is what will happen with respect to Government legislation that treats them as requiring special measures if they do not sort out the problem. At the moment, they are not sure whether to deal with the problem immediately. Perhaps the Minister could advise us what conversations her colleagues in the Ministry of Housing, Communities and Local Government have had about how to deal with the problem.

[Mike Hill (Hartlepool) (Lab)]

The right hon. Gentleman is making a powerful speech. My council, Hartlepool Borough Council, will have a shortfall of £621,000 in its high needs block funding for 2019-2020. Does he agree that our children and schools need a dedicated schools grant that is sustained and reflects local need?

[Sir Vince Cable]

I am sure that that would be sensible. The hon. Gentleman represents Hartlepool—a very different kind of community from mine in Twickenham—but his helpful intervention illustrates that the problem is felt across the board.

Why has the problem arisen? Why is there such rapid growth in demand, and why is it not being met? There are good reasons and bad reasons. One of the good reasons is that the 2014 Act extended entitlement to special educational needs provision from 18 up to 25. That was a progressive step, but nobody thought about how it would be paid for. Another big biological change is that perinatal and natal mortality has been reduced; that has been a great step in medicine, but it means that there are now many more children who are much loved by their parents but who do need extra help. We are also getting more successful early intervention and diagnosis, meaning that children with special needs are being identified but then have to be helped.

Those are the good reasons. One of the bad reasons is the decline in CAMHS that my hon. Friend the Member for Oxford West and Abingdon (Layla Moran) referred to. Another is the pressure on schools, partly as a result of the minimum £6,000 requirement, and partly because they are having to dispense with teaching assistants—in my area, certainly, cuts are reducing schools’ capacity to handle children with behavioural problems. There is also a rapid rise in exclusions. All those things are bringing pressure to bear on the system.

[Ruth George (High Peak) (Lab)]

I have just received figures from my local authority, Derbyshire County Council, that show that children who have special needs but no statement or EHCP are five times as likely to be excluded as children without special needs, whereas those who have a statement or plan are more than 12 times as likely to be excluded. Does the right hon. Gentleman agree that that is a shocking indictment of what we are delivering for children with special needs?

[Sir Vince Cable]

It is a shocking indictment, but it brings to the surface the dilemmas that many local authorities face when they are forced into a position of rationing. They are not allowed to describe it as rationing, because they would be admitting to a legal offence that could be held against them in a tribunal, but we all know that rationing takes place.

Rationing happens in several forms. One, which relates to the hon. Lady’s intervention, is that local authorities drag their feet with what were once called statements but are now called healthcare plans. I believe that the National Autistic Society says that 50% of parents with autistic children wait more than a year for those plans to appear. In other cases, provision is cut to well below the necessary standard: the Young Vision Alliance draws attention to the fact that one of the casualties of the recent rationing has been the issuing of aids to children with visual impairments, which is becoming a serious problem.

Another device that authorities resort to, although of course they do not present it as such, is refusing residential places. In most cases, inclusion in mainstream schools is much the best course of action, but in other cases residential schools are more appropriate. Yet, authorities refuse to agree to them, so the parents have to become carers while the children sit at home, become socially isolated and are never able to develop properly into adulthood.

The main consequence of the conflict between supply and demand is that more and more parents are having to go to tribunal. There has been a 20% growth in tribunals in each of the past few years, and 86% of parents win them, although perhaps “win” is not the right word—in some ways it is a lose-lose situation. Nevertheless, that is an extraordinary figure. It indicates that many local authorities are pushing parents to tribunal, knowing that they themselves will lose, incurring significant costs—about £34 million a year, I believe—simply as a way of holding off demand that they are legally required to meet.

My concluding section is about solutions. How do we deal with this? First, there is a broad acceptance that children should be kept, as far as possible, in mainstream and maintained schools rather than in more demanding provision elsewhere. That is true for educational reasons—inclusion is a good philosophy and has good results—but it is also more economical. The figures are striking: in mainstream and maintained schools, the cost is about £6,000 more for SEND pupils than for non-SEND pupils, while for maintained special schools the cost is about £23,000 more, and for private special schools it is about £40,000 more. In many cases, the private special schools perform a very important function and are of very high quality, which is clearly why people seek them out, but there is certainly some evidence that those schools are exploiting monopoly provision and taking advantage of local authorities. In some cases, they should be referred to the Competition and Markets Authority.

Notwithstanding that issue, the differential suggests an enormous demand for specialist provision that the maintained sector should cater for, but the trend is in the opposite direction. Last year, for the first time, the majority of special needs pupils were not catered for in mainstream maintained schools—a big backward step that reflects the pressures that I have described.

The second clearly undesirable mechanism being used is shifting the burden to other schools, which unfortunately is happening in my own borough. The council is deeply regretful, but it has had to ask the Department for permission to raid the schools budget because the special needs block is grossly insufficient. That is bad not just in itself, because schools are under financial pressure, but because it sets mainstream pupils against special needs pupils. It is quite wicked, actually—it creates resentment in an area in which we should be united in compassion.

[Layla Moran]

Is my right hon. Friend aware that the practice is now ubiquitous throughout the country? In Oxfordshire, we have a bizarre situation in which the heads board has refused the extra transfer of money, yet the council is now going to the Secretary of State to override what the heads of local schools believe is the right thing for everyone else. There is an inherent tension around where the money will come from. In the end, it should just be more money.

[Sir Vince Cable]

Indeed. My hon. Friend graphically highlights the dilemma that I am describing: people acting with very good intentions are now being forced into conflict, in a very damaging way.

That point brings me to the crux of the problem: the Government’s role via the high needs budget. I acknowledge that the Government have taken some action—I do not want to be completely grudging. There was an increase of £250 million in the 2018-19 and 2019-20 budgets, part of the special provision announced last year, and that is welcome. However, the LGA has run its ruler over that and has computed that it accounts for about a quarter of the deficit. It is a small step forward. A much bigger step is required.

The second thing the Government can do within existing budget constraints was raised by my right hon. Friend the Member for Kingston and Surbiton. Some money should be diverted to special needs school provision from within the large increase in cash that is being made available to the health service.

We cannot avoid the conclusion that, in the spending review ahead, the Government are simply going to have to review the weight they give to special needs provision as opposed to the normal school funding block, and to be substantially more generous in respect of special needs provision. They have announced that we have come to the end of austerity. Some of us are a bit sceptical, but this is one area where they can prove it.

[Several hon. Members rose—]

--- Later in debate ---

[Sir Vince Cable]

I thank the 13 Members who have contributed to the debate, which was very rich in content. They all pointed in pretty much the same direction, regardless of region of the UK or political party. We heard plenty of examples of the extreme tensions that parents face because of the pressures of special needs, and how so many of them have been disappointed.

I was struck by the example that the hon. Member for High Peak (Ruth George) cited of children being kept waiting and falling two years behind in their learning before they are even assessed. There are many similar cruelties and disadvantages of that kind. We also heard many examples of the pressures on schools. The Minister acknowledged the point raised by several hon. Members about the £6,000 hurdle—the perverse incentive—and although I did not hear in her speech whether she was going to change that, she at least acknowledged the problem and recognised that much of it is hidden by home schooling, which is growing rapidly.

Several Members from different parties mentioned how their councils—of different kinds—are being put into serious financial difficulties as a result of the problem. Worst of all, councils, schools and parents are reduced to fighting and blaming each other for what is actually a collective problem. The aim of the 2014 Act was to deal with all this in a consensual way, and to focus on the needs of pupils, but the issue has become a cockpit of conflict—manifested in the tribunals system—which is growing rapidly and becoming increasingly costly, both emotionally and financially.

To conclude, I wish to acknowledge some of the constructive thoughts in the debate. The hon. Member for Bexhill and Battle (Huw Merriman) talked about creating an intermediate triage system for picking needs up early before the formal assessment process is completed. The hon. Member for High Peak and others suggested that we could focus on getting more information to parents about their entitlements, to avoid their missing out or finding out too late in the day, and on changing Ofsted’s terms of reference, so that it incentivises rather than penalises inclusion, as is very often implicitly the case in its rating system. We also heard suggestions from my hon. Friend the Member for Kingston and Surbiton (Sir Edward Davey) and others about how the funding formula should be changed and how we could make more use of flexibility between health and education.

All that ultimately comes back to—I know that the Minster is painfully conscious of this—more money and the spending review. I know just how fraught that process is because I have been the head of a spending Department, but I can do no more than wish the Minister well and say on behalf of us all that we basically want a significant enhancement of special needs provision—alongside schools, not at their expense.

Finally, I will quote what I thought was one of the more memorable phrases. The hon. Member for Gedling (Vernon Coaker) said that parents just want to stop fighting and get on with being parents. I thought that was a very good way of summarising what we are all trying to say.

[Sir Gary Streeter (in the Chair)]

May I break a few rules by saying from the Chair that I strongly support the broad thrust of the debate? I very much hope that our Government will sort this out in the next 12 months. [Hon. Members: “Hear, hear.”] That is the end of me chairing.

Question put and agreed to.

Resolved,

That this House has considered special educational needs and disabilities funding.